TXNM Energy Inc. – 8-K Filing Report – February 21, 2025
Executive Summary
This 8-K filing from TXNM Energy Inc. (TXNM) announces the company’s 2024 earnings results, provides 2025 earnings guidance, and updates its long-term growth outlook. The company reported GAAP earnings of $2.67 per diluted share and ongoing earnings of $2.74 per diluted share for 2024, meeting guidance expectations. 2025 ongoing earnings guidance is set at $2.74 – $2.84 per diluted share. The long-term earnings per share growth target has been increased to 7% to 9%. The increased capital investment plan, driven by Texas transmission projects, is a key factor in the growth outlook. Overall, the filing presents a positive outlook for TXNM, driven by growth in Texas and rate adjustments in New Mexico. However, the reliance on non-GAAP measures and the inherent risks associated with forward-looking statements warrant careful consideration.
Company Overview
TXNM Energy (NYSE: TXNM) is an energy holding company based in Albuquerque, New Mexico, delivering energy to over 800,000 customers in Texas and New Mexico through its regulated utilities, TNMP (Texas-New Mexico Power Company) and PNM (Public Service Company of New Mexico). The company operates in the regulated utilities sector, which is subject to regulatory oversight, economic conditions, and energy market dynamics.
Detailed Analysis
Management’s Narrative (MD&A)
Management’s tone is optimistic, highlighting the company’s strong performance and growth prospects. The emphasis is on infrastructure investments, particularly in Texas, and the positive impact of the PNM rate phase-in. The forward-looking statements regarding earnings guidance and growth targets are prominent. The narrative aligns with the reported financial results, emphasizing growth and strategic investments.
Financial Statement Analysis
Key Highlights:
- GAAP Earnings Per Diluted Share (EPS): $2.67 in 2024 vs. $1.02 in 2023. Significant increase driven by improved performance and the absence of regulatory disallowances from 2023.
- Ongoing Earnings Per Diluted Share: $2.74 in 2024 vs. $2.82 in 2023. Slight decrease, but within the company’s guidance.
- 2025 Ongoing Earnings Guidance: $2.74 – $2.84 per diluted share. Indicates continued growth expectations.
- Capital Investment Plan: Increased to $7.8 billion for 2025-2029, a 26% increase over the prior plan. This is a significant driver of future growth.
Key Ratios and Trends:
| Metric |
2024 |
2023 |
Change |
Analysis |
| GAAP EPS |
$2.67 |
$1.02 |
+162% |
Substantial improvement, largely due to the absence of significant regulatory disallowances that impacted 2023. |
| Ongoing EPS |
$2.74 |
$2.82 |
-3% |
Slight decrease, but still a strong performance. The company attributes this to continued growth at TNMP and the PNM rate increase. |
| Operating Income (in thousands) |
$453,486 |
$231,340 |
+96% |
Significant increase, reflecting improved operational efficiency and revenue growth. |
| Electric Operating Revenues (in thousands) |
$1,971,199 |
$1,939,198 |
+1.6% |
Modest revenue growth, indicating stable demand and effective pricing strategies. |
Segment Performance:
- PNM: GAAP EPS increased significantly from $0.41 in 2023 to $2.12 in 2024, driven by the absence of regulatory disallowances and improved market performance of decommissioning trusts.
- TNMP: GAAP EPS increased slightly from $1.10 in 2023 to $1.14 in 2024, reflecting continued growth in Texas.
- Corporate and Other: Losses decreased from ($0.49) in 2023 to ($0.59) in 2024, due to higher interest rates and the sale of NMRD.
Uncommon Metrics & Footnotes
- Ongoing Earnings: The company heavily relies on “ongoing earnings,” a non-GAAP measure, to evaluate performance and set goals. This metric excludes items like unrealized gains/losses on investments and pension expenses. While management argues this provides a clearer picture of core operations, investors should carefully analyze the GAAP reconciliation to understand the excluded items.
- Reconciliation of GAAP to Non-GAAP: The filing includes detailed reconciliations between GAAP and ongoing earnings, which is crucial for understanding the adjustments made.
- Capital Investment Plan: The significant increase in the capital investment plan, particularly in Texas, is a key driver of future growth. This highlights the company’s focus on expanding its infrastructure to meet growing demand.
Risk & Opportunity Assessment
Risks:
- Regulatory Risk: As a regulated utility, TXNM is subject to regulatory changes and rate case outcomes, which can significantly impact its financial performance.
- Economic Conditions: Economic downturns can reduce energy demand and negatively affect revenue.
- Interest Rate Risk: Higher interest rates can increase borrowing costs and reduce profitability, especially given the company’s variable rate debt.
- Reliance on Non-GAAP Measures: Over-reliance on non-GAAP measures can obscure underlying financial weaknesses and make it difficult to compare TXNM’s performance with peers.
- Forward-Looking Statements: The forward-looking statements are subject to various risks and uncertainties, and actual results may differ materially.
Opportunities:
- Texas Growth: The continued expansion of grid infrastructure in Texas presents a significant growth opportunity.
- PNM Rate Phase-In: The implementation of the PNM rate phase-in is expected to improve revenue and profitability.
- Infrastructure Investments: Investments in a more reliable and resilient grid can provide long-term benefits to customers and shareholders.
Conclusion & Actionable Insights
TXNM Energy’s 8-K filing presents a generally positive outlook, driven by growth in Texas and rate adjustments in New Mexico. The increased capital investment plan signals a commitment to future growth. However, investors should carefully consider the risks associated with regulatory changes, economic conditions, and the company’s reliance on non-GAAP measures. The increased long-term growth target of 7-9% appears achievable given the planned capital expenditures and favorable regulatory environment in Texas. Monitor future filings for updates on the PNM rate case and the progress of infrastructure projects in Texas.